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Who can help with financial advice? A financial consultant or a financial advisor? Sometimes choosing a financial professional can be a daunting task, and especially when you have no idea which expert is best suited to address your concerns. Today, we get down to the nitty-gritty of financial advisors and financial consultants.
What is a financial advisor?
Financial advisors are professionals who help people clearly understand their current financial situations. Once they do that, they go a step further to help them meet their short-and long-term financial goals. Often, people need the assistance of financial advisors when planning to start an investment, planning for college, retirement, and when they have more capital to meet regular expenses. Rarely will financial advisors see clients who are preparing for things like job transition, divorce, marriage, or the birth of a child.
Some financial advisors are licensed to buy and sell financial products, with some focusing on this as the main hustle. Often, security analysts, bankers, insurance brokers, and other financial experts may call themselves financial advisors, yet they spend less time advising clients.
What is a financial consultant?
In simple terms, financial consultants are professionals who help people build wealth by designing comprehensive, long-term financial strategies. They work closely with their customers (as their personal financial advisors) over the long-term strategizing, and developing actionable plans. The way they look at personal finance is similar to the way analysts look at large financial systems.
Financial consultants can work closely with other experts, such as investment managers and accountants in some projects. Most of them spend time educating their clients, and some offer financial services.
What is the difference between a financial advisor and a financial consultant?
While some people urge there exist no differences between financial advisors and financial consultants, actually, there is a difference between them. One notable difference is based on the length of the relationship they maintain with clients. Advisors work with their clients over a period of years by manging their current finances and helping them plan for the future. That is not the case with consultants. For them, they work with their clients to address specific, time-limited issues. Once they offer solutions, the relationship ends.
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As you may have noticed, this explanation may seem to contradict the descriptions above. This is because, in reality, the approach and focus taken by financial advisors and financial consultants vary more between professionals than between roles. That can explain why you are likely to find both advisors and consultants focused on long-term wealth building.
What is a financial advisor?
Some people maintain that financial planners are different because of their certification. What they forget is that there are advisors and consultants with the same certifications. Others will urge financial planners are different because their primary function is to create actionable money management plans tailored to meet long-term financial goals. But does that still sound like what financial advisors and consultants do?
In a nutshell, the approach, education, certifications, and experience of an advisor, planner, or consultant may be different or the same.